Irish spread betting firm likely to make loss despite revenue growth

WORLDSPREADS, the Irish-founded financial spread betting and online share trading service, has stated that it is likely to make a loss in its current financial year, rather than a profit as initially anticipated.

The London-headquartered firm said in a trading update, yesterday, that while it is still witnessing revenue growth, the acceleration of that growth that was expected during the second half of the firm’s latest financial year has not materialised.

“Thus, rather than the year-end profits expected, the group may instead post a small loss,” the statement added.

Worldspreads’ financial year runs until the end of March.

Yesterday’s statement said that transaction numbers (the company offers spread trading/ betting services on equities, commodities, currencies, etc) for the relevant 12 month period are up by more than 50%, with active client numbers up more than 40% and client funds on deposit up by more than 80%.

It added that the company’s balance sheet remains strong, with net assets valued at more than €20m. The question over profitability seems to lie with the company’s international expansion during the year.

According to group chief executive Conor Foley: “We were very pleased that we became operational in France, Germany, Denmark and Sweden in October 2010 — all of which represent key new territorial opportunities for the group.

“It was critical, at this stage of our expansion, that the marketing campaigns were finessed during their early phases to meet the respective geographic circumstances and, with market volatility being lower than anticipated across all areas, the new businesses were launched into a much quieter period.”

“Consequently, while growth in revenues from our existing international businesses has continued, incremental revenues from these new territories have not yet materialised to the extent originally envisaged,” he added.

While Worldspreads added it still feels its strategy for overseas expansion will achieve its original objectives (though not, probably, until its next financial year), yesterday’s news still hit the company’s share price hard with it falling by nearly 17% or 11c to 55c.